Merchants and financial institutions attribute hundreds of billions of dollars in losses each year directly to identity fraud. Stolen credit cards result in financial losses by consumers and their credit scores may also be adversely affected. Correcting this type of criminal activity is often burdensome for consumers, merchants, and financial institutions alike. Card issuers are seldom able to manage fraud in real time, and by the time the card issuer's system detects potential misuse, a stolen card may be used multiple times in many different locations. A significant amount of damage may have occurred by the time the fraudulent activity is discovered by the card issuer. The process of issuing transaction cards to consumers is also unsafe and is prone to theft and misuse. The process is not completely automated, and it requires the handling of issued cards by multiple parties outside of the card issuer and consumer. Additionally, payment transactions go through a complex system where the card issuer must authorize a payment even though the issuer cannot verify with a great degree of certainty that the card being used in a payment transaction is being used by the card owner. Accordingly, there is a need for an improved system and method of verifying a user's identity.